If the quantity demanded of beef increases by 10% when the price of chicken goes up by 8%, the cross- price elasticity of demand between beef and chicken is:
A) + 1.25
B) - 0.8
C) + 0.8
D) - 1.25

Question

Quizplus · Accepted Answer

Cross-price elasticity of demand is calculated as the percentage change in quantity demanded of one good divided by the percentage change in price of another good. Here, it is 10% / 8% = 1.25, and since the demand for beef increases when the price of chicken increases, the elasticity is positive.

If the Quantity Demanded of Beef Increases by 10% When